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2016 (1) TMI 897 - AT - Income TaxDenial of claim of deduction u/s 54EC - short term capital gain or long term - inclusion of period of holding of the previous owner - inherited property - Held that:- It has been clarified by way of explanation, the expression ‘previous owner of the property’ in relation to any capital asset owned by the assessee means the last previous owner of the capital asset, who acquired it by a mode of acquisition other than that referred to in clause (i) or clause (ii) or clause (iii) or clause (iv) of this sub-section. Thus, capital gain tax is to be computed by taking into consideration the provisions of section 49(1)(iii)(e), i.e. taking the cost of acquisition of the asset in question to be the cost of acquisition in the hands of the previous owner. The flat in question was inherited by the assessee from his grandmother and the assessee obtained the affidavit cum declaration in August 2006 and thereafter the society carried out the transfer in the name of the assessee. In fact, the assessee did not inherit the property directly from her grandmother but from sons and daughters of grandmother. Even as per the provision of the Act, it is the cost of the “previous owner” which has to be reckoned, thus, in view of section 2(45A) of the Act r.w. Explanation-1 and the circumstances mentioned in section 49(1) of the Act, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it as increased by the cost of any improvement of the asset incurred or borne by the assessee, as the case may be. The two sons/daughters who in turn gifted the property to the assessee on 08/08/2006, thus, this is the relevant date with respect to the term previous owner. The assessee sold the property on 27/09/2008 before the period of 36 months, thus, the capital gain arising there from cannot be said to be long term capital gains and is certainly a short term capital gain as the sale was effected almost within a period of 2 years. In this case, the “previous owners” are sons and daughters of Smt. Kantaben Shah (grandmother) and from whom the property came to the assessee. The property directly did not come to the possession of the assessee from the grandmother, therefore, the stand of the ld. Commissioner of Income Tax (Appeals) is affirmed. - Decided against assessee.
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